CFPB fines auto lender for violating 2015 consent order

CFPB auto lender consent orderOn April 26, the CFPB announced that it had issued a $1.25 million civil money penalty against Security National Automotive Acceptance Company (SNAAC), an auto finance company that specializes in lending to service members, for allegedly violating an October 2015 consent order. According to the Bureau, SNAAC failed to comply with the Bureau’s 2015 consent by not providing over $1 million in refunds and credits to consumers.

The 2015 consent order found that SNAAC had engaged in unlawful acts and practices relating to its collection of consumer debt. More specifically, the CFPB found that SNAAC made misleading statements about the potential impacts on consumers’ military careers, threatened to and did in fact disclose details about consumers’ debt and delinquencies, and made misleading statements regarding its intention to take legal action against consumers.

The CFPB ordered SNAAC to pay a $1 million penalty and to provide $2.275 million in redress to affected consumers. The 2015 consent order also required SNAAC to submit a written plan for providing redress consistent with the order. According to the CFPB, SNAAC submitted two plans, but neither adequately distributed redress to consumers in accordance with the consent order.

The CFPB examined SNAAC’s redress procedures and determined that SNAAC had violated the terms of the 2015 consent order by failing to properly give refunds or credits to affected borrowers.

In today’s 2017 Consent Order, the Bureau specifically alleges that instead of provided cash refunds, SNAAC provided “worthless credits” to consumers who had settled their accounts in full or had their debts discharged in bankruptcy. The Bureau contends that those consumers did not receive benefit from such a “credit” because they no longer owed SNAAC money and could not use such a credit toward any new or existing loan. In addition, the CFPB claimed that SNAAC also failed to provide proper refunds and credits to consumers who were making payments under settlement agreements.

The 2017 consent order requires SNAAC to make good on the redress it owes to those consumers by paying approximately $720,000 in refunds and issuing about $370,000 in new credits to service members and other consumers as required by the 2015 consent. SNAAC also must pay an additional $1.25 civil million penalty to the CFPB’s Civil Penalty Fund (in addition to the $1 million it already paid under the 2015 consent order).

Tags: CFPB, CFPB Enforcement

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